Thinking Long Term

I spent most of the Patriots Redskins game yesterday working on a 2012 outlook article for Seeking Alpha. I had answered one question for Saturday’s post and then the other 19 yesterday. This was interesting in terms of comparing how I answered the questions this year to how I answered similar questions last year. There are two factors here. One is that not much has changed. We are slogging through, there has been some evolution in terms smaller issues but the bigger issues both here and in Europe are not yet resolved even if we know a couple of things now that we did not know before. As a result, the fundamentals for the things I have been saying stink still stink, the housing market is not started any sort of significant recovery, jobs are still not where they need to be to belie health, treasury yields are still getting what I’d call a panic bid, our political situation has somehow become more dysfunctional and Europe is even worse. The other factor is the extent to which I try to take a long term view with the portfolio and themes and exposures embedded within. Not everything in a portfolio will work as hoped for of course but assuming something doesn’t turn out to be immediately incorrect, then most long term exposures can be given time to do well. That does not mean that each exposure will work for all times but one year means a lot less than five years, at least for us it does. A perfect example of this might be Vale (VALE). We’ve owned the stock...

Thinking Long Term

I spent most of the Patriots Redskins game yesterday working on a 2012 outlook article for Seeking Alpha. I had answered one question for Saturday’s post and then the other 19 yesterday. This was interesting in terms of comparing how I answered the questions this year to how I answered similar questions last year. There are two factors here. One is that not much has changed. We are slogging through, there has been some evolution in terms smaller issues but the bigger issues both here and in Europe are not yet resolved even if we know a couple of things now that we did not know before. As a result, the fundamentals for the things I have been saying stink still stink, the housing market is not started any sort of significant recovery, jobs are still not where they need to be to belie health, treasury yields are still getting what I’d call a panic bid, our political situation has somehow become more dysfunctional and Europe is even worse. The other factor is the extent to which I try to take a long term view with the portfolio and themes and exposures embedded within. Not everything in a portfolio will work as hoped for of course but assuming something doesn’t turn out to be immediately incorrect, then most long term exposures can be given time to do well. That does not mean that each exposure will work for all times but one year means a lot less than five years, at least for us it does. A perfect example of this might be Vale (VALE). We’ve owned the stock...

The Big Picture for the Week of November 27, 2011

Yesterday, my reading took me to a revisit of a few themes that I have written about over the years which brings up a point worth mentioning that coincidentally came up during my visit to Maryland last week. The themes in question are Scandinavian banks, Mongolia and publicly traded farming/plantation stocks. The point here is not the content of what I read, you can find news easily enough, but is the time that goes in to the initial learning and then the ongoing monitoring of these things even if you don’t own them. Learning some of the basics is not that difficult and keeping tabs on some of the bigger news items like things negative affecting fish production or the price of copper or knowing who is exposed to Hungary is also doable. In addition to the above it is important to understand the volatility characteristics of the stock you might be most interested in but also other names, if there are any, in the space. Most of the obscure things that I have found, researched and written about have very simple supply and demand characteristics but the stock trading is far more complex meaning they tend to be wildly volatile. In exploring themes there will be some number that you buy and some number you won’t out of the total number you research. In order for the theme to be investable you need to be comfortable with both the fundamentals, how the stock trades and where it is priced. Over the years I’ve written about the themes we own but the above are themes we don’t own. I...

The Big Picture for the Week of November 27, 2011

Yesterday, my reading took me to a revisit of a few themes that I have written about over the years which brings up a point worth mentioning that coincidentally came up during my visit to Maryland last week. The themes in question are Scandinavian banks, Mongolia and publicly traded farming/plantation stocks. The point here is not the content of what I read, you can find news easily enough, but is the time that goes in to the initial learning and then the ongoing monitoring of these things even if you don’t own them. Learning some of the basics is not that difficult and keeping tabs on some of the bigger news items like things negative affecting fish production or the price of copper or knowing who is exposed to Hungary is also doable. In addition to the above it is important to understand the volatility characteristics of the stock you might be most interested in but also other names, if there are any, in the space. Most of the obscure things that I have found, researched and written about have very simple supply and demand characteristics but the stock trading is far more complex meaning they tend to be wildly volatile. In exploring themes there will be some number that you buy and some number you won’t out of the total number you research. In order for the theme to be investable you need to be comfortable with both the fundamentals, how the stock trades and where it is priced. Over the years I’ve written about the themes we own but the above are themes we don’t own. I...

Thinking Loooooooong Term

Last weekend I had a post up that tried to poke holes in the Five Stocks to Hold Forever types of articles. In that post I mentioned in passing that while we don’t have to pick five of anything to hold forever, it would make more sense to think about this in terms of countries instead of individual stocks. An editor at Seeking Alpha asked me to write something up following through on the five country idea which I was not thrilled about doing but then a reader asked the same thing. In thinking about this a little I thought that what this really should be about was five (or any number important to you) top down segments which could include countries but also themes and sectors. One theme would be things related to food and water. Yes this is a Malthusian argument but it seems very obvious that there is now not enough food and water in many places and a lot of money will be spent trying to solve this problem as the world population continues to grow. Some do not believe in this and so they would have no interest in the theme. There are plenty of ETFs and individual stocks for this theme taking on all sorts of attributes in terms of countries, volatility and yield. Another theme but also is about country selection is the Brazilification of other countries. You can probably guess that I mean countries that are likely to become more prosperous and see a middle class emerge/proliferate as they sell resources to other countries. We own Brazil which is relatively mature...

Thinking Loooooooong Term

Last weekend I had a post up that tried to poke holes in the Five Stocks to Hold Forever types of articles. In that post I mentioned in passing that while we don’t have to pick five of anything to hold forever, it would make more sense to think about this in terms of countries instead of individual stocks. An editor at Seeking Alpha asked me to write something up following through on the five country idea which I was not thrilled about doing but then a reader asked the same thing. In thinking about this a little I thought that what this really should be about was five (or any number important to you) top down segments which could include countries but also themes and sectors. One theme would be things related to food and water. Yes this is a Malthusian argument but it seems very obvious that there is now not enough food and water in many places and a lot of money will be spent trying to solve this problem as the world population continues to grow. Some do not believe in this and so they would have no interest in the theme. There are plenty of ETFs and individual stocks for this theme taking on all sorts of attributes in terms of countries, volatility and yield. Another theme but also is about country selection is the Brazilification of other countries. You can probably guess that I mean countries that are likely to become more prosperous and see a middle class emerge/proliferate as they sell resources to other countries. We own Brazil which is relatively mature...